News Historic Tax Credit

NTCIC Public Policy Updates | November 2018

Written By: NTCIC

November 8, 2018

NTCIC Public Policy

In the 2018 elections, House Democrats won a sufficient number of seats to flip the balance of power in the House and provide some cushion beyond the 218 seats needed for the majority. However, Republicans did fare better in the Senate. There are multiple races still undecided, but Republicans could increase their majority over the 51 Senators presently seated in the 115th Congress.

With a divided government coming in January, Republicans see an opportunity to pass key legislation during the year-end “Lame Duck” session while they still hold majorities in each chamber. Since standard Senate procedures requiring 60 votes will apply, passage of these priorities will require bipartisan support of Senate Democrats and collaboration with the House Republicans.

Advocacy to Enhance the HTC

Last year, industry and preservation advocates worked with many Members of Congress to retain the Historic Tax Credit (HTC) in a reformed tax code. While they were successful in keeping the HTC as a permanent tax credit, the HTC is now taken over 5 years, resulting in a loss of value.

Rep. Darin LaHood (R-IL), Rep. Earl Blumenauer (D-OR), Sen. Cassidy (R-LA), and Sen. Cardin (D-MD), introduced legislation last June to enhance the credit with the “Historic Tax Credit Enhancement Act” (HTCEA), H.R. 6081 and S. 3058. This bill would eliminate the basis adjustment requirement for HTC transactions. Presently a property’s basis (value for tax purposes) must be reduced by the amount of HTCs claimed and is therefore entitled to fewer tax benefits. This change would enhance the value of all HTC transactions, attract more capital from tax credit investors, simplify how the credit functions, and improve how the credit pairs with other economic development programs such as the Low-Income Housing Tax Credit and new Opportunity Zone incentive.

Bill sponsors anticipate an opportunity to attach the HTCEA language to a larger legislative package that could possibly move through Congress during the year-end Lame Duck session. Support for the legislation needs to come from both sides of the aisle to improve its chances of enactment. For more information: Read More >

Advocacy to Extend the New Markets Tax Credit (NMTC)

NTCIC is also supporting NMTC advocates to extend the NMTC program beyond 2019 (when it is currently slated to sunset) and to make the NMTC permanent in the tax code. The NMTC Extension Act (HR 1098 and S. 384) is sponsored by Rep. Tom Reed (R-NY) and Rep. Richard Neal (D-MA) in the House and Sen. Roy Blunt (R-MO) and Sen. Ben Cardin (D-MD) in the Senate. With 101 Members of Congress currently supporting the permanency bill in the House, advocates are pushing for this legislation to also be included in any Lame Duck tax legislation.

In addition, the recently proposed Rural Jobs Zone Act of 2018 (H.R. 6627), sponsored by Rep. Jason Smith (R-MO) would provide for an increase of $1 billion in additional NMTC allocation over 2 years to rural projects in persistent poverty, high-migration, and non-metro-area census tracts that are currently eligible but underserved by NMTCs. NTCIC has worked with colleagues at the National Trust as well as the National Main Street Center to activate the preservation community to support this legislation. At least 474 Main Street Communities could benefit from this targeted legislation. For more information on NMTC Advocacy go to:

Opportunity Zones

NTCIC is also exploring how the new Opportunity Zone program pairs with HTCs, NMTCs, LIHTCs and Solar Tax Credits. Opportunity Zones allow investors to defer and reinvest unrealized capital gains into areas that are economically distressed. First, the incentive affords the taxpayer the ability to defer and potentially reduce the taxation through December 31st, 2026 by reinvesting capital gains within 180 days into a “Qualified Opportunity Fund.” The second and more lucrative part of this incentive allows for a total exemption of capital gains taxes if the above investment is held for more than 10 years. NTCIC is exploring the requirements associated with establishing a Qualified Opportunity Fund as a tool for raising additional capital for our tax credit investments in low-income areas.